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Today is International Day for the Eradication of Poverty which acknowledges the effort and struggle of people living in poverty. Low-income countries tend to have large informal sectors, greater prevalence of self-employment and subsistence agriculture, low female labor force participation rates, and poor labor market conditions. As labor is most often the only asset of someone in poverty, policies that are not associated with job creation, such as education and entrepreneurship programs, may fail to reduce poverty.
Developing countries often face two well-known structural problems which can lead to poverty: high youth unemployment and high inequality.This is especially prevalent in Africa which is projected to have the youngest and largest labor force in the world in the coming decades. Abebe Shimeles suggests that expanding higher education might solve rising youth unemployment in Africa. He says that as the global economy is becoming increasingly knowledge-driven, investment in vocational and higher education is important for developing countries to remain competitive.
Another characteristic of the labor force in developing countries is that a majority of the workforce is self-employed, usually in low-paying work that keeps them in poverty. In her article Entreprenership for the poor in developing countries, Yoonyoung Cho says that “fostering entrepreneurship is widely perceived to be critical for expanding employment and earning opportunities and for reducing poverty.” These programs vary in design, which affect their impact on outcomes. However, recent studies have identified some promising approaches that are yielding positive results, such as combining training and financial support.
Read further analysis on the labor market in developing countries.
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